Miners talk up big asset sales – by Paul Garvey (The Australian – August 7, 2014)


IT’S long been said that the juiciest stories out of Diggers & Dealers come not from the procession of speakers at the conference ­podium, but instead from the Hannan Street bars packed full of delegates each night (and often well into the next morning).

This year was no different. If the chatter doing the rounds in the bars of the Palace and Exchange hotels is anything to go by, we should be standing by for a flow of deals in the months ahead.

While Kalgoorlie’s infamous skimpies went about their business behind the bar — this year’s collection of scantily clad barmaids were apparently flown in from the Gold Coast specially for the event — much of the talk ­focused on the big asset sales said to be in the works.

The sales process around BHP Billiton’s Nickel West smelter, just down the road from the ­action in Kalgoorlie, was a subject of significant gossip.

Despite reports Glencore had walked away from the process, there was talk the Swiss giant was in fact still in the fray albeit frustrated by BHP’s approach to the sale. Private equity group Apollo Global Management is understood to have its offer for the assets knocked back, while China’s Jinchuan is still very much in the running.

One view was that Jinchuan may partner with nickel miner Panoramic Resources, with whom it has forged a strong relationship over several years.

Panoramic managing director Peter Harold gave a curt “no comment” when asked about the situation.

Also subject to much conjecture was the Koolyanobbing iron ore mine of US group Cliffs Natural Resources. A recent board challenge was won by a ticket ­advocating the sale of its non-US assets, with Koolyanobbing flagged as a likely asset for sale.

Cashed-up iron ore miner Mineral Resources, fresh from its spurned $1.4 billion offer for ­Aquila Resources, has the appetite for a bid. And Chinese groups may see an opportunity to reverse their habit of buying early-stage iron ore assets that have ultimately proved difficult to develop and instead snap up an existing mine with a certain, if limited, production profile.

Iron ore duo Mt Gibson and BC Iron have swollen bank ­accounts but both are unlikely to be in the running for Koolyanobbing given its projected mine life of just six years does nothing to address their own longer-term production concerns.

No one in Kalgoorlie seems to expect the new Cliffs board will be able to reap anything like the $1 billion-plus price tag they have been touting, with bids likely to come in at less than half that.

The bar-room scuttlebutt also suggested a renewed appetite among smaller players to explore M&A opportunities. The successful acquisitions in the past year by companies such as Bill Beament’s Northern Star Resources appears to have emboldened boards who had previously preferred to focus on their existing assets.

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